Wood v. Beath

Cole, J. The counsel on both sides concede that the agreement referred to in the complaint constituted the parties to it partners during its continuance. And this is undoubtedly the correct interpretation of that agreement. The plaintiff contributed toward the business his manufactory, shops, with tools, implements and machinery therein, and the land upon which they were situated; and the defendants were to furnish capital to the amount of $20,000, and labor, to carry on the business. They were to account to the plaintiff “ at reasonable periods of time for the proceeds ” of the business, or for the profits made thereon ; all daily transactions were to be entered on the books, to which the plaintiff was to have access ; at stated periods an account was to be taken of the profits, which, after deducting the costs and expenses of running the works, and certain specified charges, were to be divided between the parties. Thus there was to be a community of interest in the capital to cany [259] on the business, and a community of profit and loss; and this rendered them partners. This being so, what is the object of this action ? It is manifestly a suit in equity, for a rescission of the articles of copartnership; for a dissolution of the partnership ; for damages for the various breaches of the agreement set forth in the complaint; for a restitution of the property to the plaintiff; and for general relief. It is very obvious that this presents a case of equitable cognizance; and if the complaint states a sufficient cause, the partnership will be dissolved. There are various breaches of the partnership agreement alleged in the complaint. The agreement provides, that the defendant should put in $20,000 capital, and that the works should be used in such a manner as would afford the greatest amount of profit to the parties concerned, in the manufacture of wagons or other articles of demand, at the rate of at least fifteen wagons per week, or to an equivalent value of other articles. It is alleged, that the defendants have not kept this covenant, but have used the works in such a manner as to deprive the plaintiff of all rents and profits of his property, and that they are fast wearing out the machinery and fixtures of the plaintiff. It is further alleged, that they have neglected and refused to account to the plaintiff at reasonable periods of time, or at any time, for the proceeds of the manufacture, or the profits made therein, according to the spirit and tenor of the agreement. In the argument of the counsel for the respondents it is claimed, that the clear and necessary implication from the language of the agreement is, that the accounting was to cover one year at least, and that the complaint failed to show a breach of this covenant. It is true, the agreement does not state the precise times when the accounting was to b.e had; at one place it is stipulated that the defendants should “ account to the party of the first part at reasonable periods óf time for the proceeds of said manufacture, or profits thereon, according to the spirit and [260] tenor of the agreement; ” and again they agreed “ at stated periods to take an account of tlie profits of the establishment,” etc.; but, considering tbe whole agreement, we are satisfied that the parties contemplated an accounting oftener than once a year. This is evident from the clause which provides that the defendants might pay out of the plaintiff’s share of the net profits, to the First National Bank of Kenosha, the sum of $2,0,00, .within six months from the time of the execution of the agreement — a stipulation which could not. be complied with if there was to be only a yearly accounting. Nine months had elapsed, when this action was commenced, since the agreement was executed; 'and we have no hesitation, therefore, in holding, upon the allegations of the complaint, that there was a violation of the covenant to account. There are also other breaches alleged, on the part of the defendants, of the articles of, copartnership, such as a neglect to enter upon the books all the daily transactions, purchases, etc.; and, also, a refusal to permit the plaintiff, to inspect the books. These, with other matters set forth in the complaint, certainly show great misconduct on the part of the defendants, and afford a sufficient ground, if sustained by evidence, to authorize a dissolution of the partnership. They show that the defendants have failed to contribute their amount of capital; that the business is not profitably and beneficially conducted; that the plaintiff’s property is being greatly injured; and that he is excluded from an inspection of the books, and cannot secure an accounting according to the agreement. This is the cause of action presented by the complaint. We think it is sufficient to warrant a court of equity in interfering and dissolving the partnership. The demurrer to the complaint was, therefore, improperly sustained. By the Oourt. — Tim order of the circuit court sustaining the demurrer is reversed, and the cause remanded for further proceedings according to law.